Adverse selection is a problem associated with equity and debt contracts arising from
A) the lender's relative lack of information about the borrower's potential returns and risks of his investment activities.
B) the lender's inability to legally require sufficient collateral to cover a 100% loss if the borrower defaults.
C) the borrower's lack of incentive to seek a loan for highly risky investments.
D) the lender's inability to restrict the borrower from changing his behavior once given a loan.
A
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In a market with ________, one side of the market has private information that is relevant for the other side
A) asymmetric information B) perfect competition C) monopolistic competition D) positive externalities
The backward-bending supply curve of labor applies to _____
a. individuals b. groups c. the economy as a whole d. theoretical models
Which of the following statements is TRUE about the market and individual firm's supply curve for labor?
A) The market supply curve is perfectly elastic and the individual firm's supply curve is perfectly inelastic. B) The market supply curve is perfectly inelastic and the individual firm's supply curve is perfectly elastic. C) The market supply curve is more elastic than the firm's supply curve. D) The market supply curve is more inelastic than the firm's supply curve.
Which of the following is NOT an example of an explicit cost?
A. The income the owner could have earned in his or her next best employment opportunity. B. The salaries paid to the managers who help run the business. C. The overtime wages paid to workers. D. The rent the owner pays each month to lease office space.